Serco and Kier were among gainers today on FTSE 350 that benefitted after construction and services company, Carillion, collapsed on Monday. Companies that both lost and gained cut across a swathe of industries reflective of Carillion’s own breadth of operation.
Companies that could potentially pick up work were outsourcing contractor Serco up +7.39% at close which could pick up healthcare facility management contracts. Kier Group which is engaged in construction and building and civil engineering could gain road work and rose +3.51%.
Other areas where potential work could be gained were defense, Babcock was up +0.97% at market close. Although Balfour Beatty was seen as potentially gaining in rail in the coming months according to broker Liberum, it fell (-3.25%) on news that the collapse of Carillion could have a cash impact of between £35m and £45m.
Galliford Try, another construction firm, slumped -7.28% after both it and Balfour will need to inject an additional £60m-£80m to complete the Aberdeen Western Peripheral Route as joint partners.
“Ultimately the situation around Carillion is a function of a competitive outsourcing and construction market in the UK, amplified by excessive financial leverage which has built up over recent years,” said UBS analysts in Reuters.
“While the departure of a competitor may ease this, we think the impact will likely be small given the fragmented nature of the market.”
Meanwhile supplier Speedy Hire which in 2017 renewed a supply contract with Carillion worth up to £45m over three years and counts Carillion as one of its largest clients also plunged in trading down -4.98%.